EUR/GBP consolidates below multi-week tops, bulls await a move beyond 0.8600 mark

• EUR/GBP lacked any firm directional bias and oscillated in a range on Wednesday.
• Weaker data turned out to be a key factor behind the euro’s underperformance.
• The recent rise in COVID-19 cases undermined the sterling and helped limit losses.

The EUR/GBP cross seesawed between tepid gains/minor losses through the early European session and was last seen trading in the neutral territory, around the 0.8585 region.

Following the previous day's modest pullback from the 0.8600 neighbourhood, or near six-week tops, the EUR/GBP cross witnessed some selling during the first half of the trading action on Wednesday. The disappointing release of German Retail Sales figures turned out to be a key factor behind the shared currency's relative underperformance.

The EUR/GBP cross remained on the defensive following a slight downward revision of the August Manufacturing PMI prints for Germany and the Eurozone. Conversely, the UK Manufacturing PMI was finalized at 60.3 as against 60.1 reported in the flash estimate. This was seen as another factor that contributed to the pair's modest intraday downtick.

That said, the recent spike in new COVID-19 cases in the UK turned out to be a key factor that acted as a headwind for the British pound. According to the official figures released on Tuesday, another 32,181 people in Britain tested positive for COVID-19. This, in turn, helped limit any meaningful slide for the EUR/GBP cross, at least for now.

Meanwhile, bulls are likely to wait for a sustained move beyond the 0.8600 mark before positioning for an extension of the recent strong rebound from mid-0.8400s, or the lowest level since February 2020. The EUR/GBP cross might then climb to an intermediate hurdle near the 0.8640 region en-route July monthly swing highs, around the 0.8670 area.

Technical levels to watch